1. Field of Disclosure
The disclosed embodiments relate to electronic trading of funds, electronic funds management, and real-time fund processing systems.
2. Background of the Disclosure
The financial industry utilizes various tools to assist it in tracking and reacting to changes in the market such as changes in index, asset, share/claim counts, prices, returns and the like. Some of these tools include specialized computer based systems to assist in performing various tasks. To date, however, these systems have had many draw backs and disadvantages despite some advantages they provide.
For example, U.S. Pat. No. 5,987,435 to Weiss et al discloses a proxy asset data processor. The disclosed data processing system manages and implements a form of trading security designated as a proxy asset. Proxy assets according to the '435 patent purportedly provides a sophisticated risk management capabilities without the complexities associated with other types of risk management investment vehicles. The proxy asset is made possible by the enhanced processing capabilities of the proxy asset data processor that create, track, manage, and govern asset accounts for participating investors. The '435 patent has an Up Proxy Asset and a Down Proxy Asset that is an interface between the Pooled Sales Proceeds and the Broker Markets to provide security.
Another example is U.S. Pat. No. 6,513,020 also to Weiss et al. that discloses another data processing system manages and implements a form of security designated as proxy asset. This system is some what different than the related '435 patent. Again, proxy assets purportedly provide a sophisticated risk management capability without the complexities associated with other types of risk management investment vehicles. The Proxy Asset is made possible by the enhanced processing capabilities of the Proxy Asset data processor which create, track, manage, and govern asset accounts for participating investors. The '020 patent does have segregated Proxy Assets. The '020 patent discloses a Proxy Asset interface between the Cash asset and Broker Markets to provide security.
In both of these cases, the patents define in the Background sections Proxy Assets as a type of security designed to make effectively tradable existing broad categories of illiquid assets or claims on income flows, assets or claims that are individually difficult or impossible to buy, hold, or sell directly. The Proxy Asset is designed to have a traded market price that reflects the true liquid-market value of illiquid assets or claims . . . ”. The Proxy Asset does not identify who is doing the trading, such as market professionals, market makers, sophisticated institutions, and sophisticated individuals.
The '435 patent and the '020 patent are limited to operation over proxy assets; and limited to the transformation of “illiquid assets or claims” into tradable instruments. Mechanistically, both patents rely on a segregation of assets within an entity which has issued shares to investors. Each class or group of issued shares is linked to a unique “proxy asset account value” where value is shifted among all “proxy asset account values” by reference to an “account formula.”
The '020 patent extends references to proxy assets (singular for a share) to encompass proxy asset groups to incorporate more complex proxy asset combinations and arrangements. It also extends value shifts to be performed with respect to higher order groupings of proxy assets in each “account formula”, and contemplates that assets other than cash may be moved (actually or nominally) under the account payout formulas.
Importantly, both the '435 and '020 discloses segregated asset account values are used consistently in both patents for the purpose of driving the linked interests.
However, there are still draw backs with these systems and other similar systems in the art. For example, none of these financial systems address the needs of a system with transformations of interests, having no asset segregation, real time market monitoring of system (intrinsic) values with realized real-time market trading values, and automated system responsiveness to alter the transformations in response to real-time monitoring. There still remains a need in the art for a financial system and method based on issuers which issue and distribute interests which resolve accurate holder values at intervals measured in days, weeks or months rather than years. There is a further need to have no segregation of accounts or assets and all shares have an equal claim in liquidation (different shares may have differing entitlement to shares distributions). The financial system and method should also perform continuous real-time monitoring to compare system created intrinsic values with realized market trading values. It should also transform all shares into offsetting index neutral positions upon the occurrence of a tracking error to ensure that holders of interests realize accurate outcomes regardless of market conditions.